Economics 159: Introduction to Game Theory. Summer 2015: Session A. Online Course
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1 Economics 159: Introduction to Game Theory Summer 2015: Session A Online Course *Syllabussubjecttochange.Checkcoursewebpageforup-to-dateinformation* This course is an introduction to game theory and strategic thinking. Ideas such as dominance, backward induction, Nash equilibrium, commitment, credibility, asymmetric information, and reputation are discussed and applied to games played in class and to examples drawn from economics, politics, movies, and life. Meeting Location: online course Meeting Times: Tuesday and Thursday, 10:00am - 11:30am. Professor: Zvika Neeman [email protected] Teaching Fellow: Chiara Margaria [email protected] Online Office Hours: TBA. Textbook: The Art of Strategy by A. Dixit and B. Nalebuff. Norton Course Website: This website will contain an up-to-date syllabus, lecture notes and problem sets, and other materials as they become relevant. Requirements: This course is an introduction to game theory. Introductory microeconomics (115 or equivalent) is not required but is recommended. We will use calculus (mostly one variable) in this course. We will also refer to ideas like probability and expectation. Grading: Problem sets: 25% Midterm examination: 30% (June 19, 10am-12:30am) Final examination: 45% (July 3, 10am-12:30am) Problem Sets:
2 The lecture notes contain many exercises. Every Tuesday, you are expected to submit your solutions to all the exercises in the notes that were covered in the previous week. The Problem Sets are graded on a, scale; the grade is for good faith effort rather than correct answers. Together, the four problem sets (the last problem set is not for submission) count for 25% of the overall final grade for the course. You are free to discuss the problem sets with each other, but each student should submit his or her own problem set to receive credit for it. Exams: The midterm exam will be held on Friday, June 19 at 10am. It will be proctored live online via web cam and you will have to me a pdf file with your scanned answers by 12:30pm of the same day. The final exam will be held on Friday, July 3 at 10am. Like the midterm exam, it will also be proctored live online via web cam and you will have to me a pdf file with your scanned answers by 12:30pm of the same day. 2
3 Tentative Class Schedule *Checkwebsiteforup-to-dateinformation* Module 1: Introduction and the Prisoners Dilemma Reading: Art of Strategy, Ch. 1, 3. Lecture Notes: Introduction; Strategic Form Games: Definition; Dominant Strategies. Online Lecture 1: Introduction, the Prisoners Dilemma, a surprise game. Module 2: Dominated Strategies Reading: Art of Strategy, Ch. 3. Lecture Notes: Successive Elimination of Strictly Dominated Strategies; Weakly Dominated Strategies. Online Lecture 2: Successive Elimination in Cournot Competition and in Hotelling s Model. Problem Set 1: Exercises 1-6 in the Lecture Notes; Due by Tuesday June 9 at Module 3: Nash Equilibrium Reading: Art of Strategy, Ch. 4, 5. Lecture Notes: Pure Strategy Nash Equilibrium; Mixed Strategy Nash Equilibrium; Existence of Nash Equilibrium. Online Lectures: 3.Afewexamples,coalitionaldeviations,andinterpretation; 4.Examples of mixed strategy Nash equilibrium and interpretation. Problem Set 2: Exercises 7-16 in the Lecture Notes; Due by Tuesday June 16 at Module 4: Backwards Induction and Subgame Perfect Equilibrium 3
4 Reading: Art of Strategy, Ch. 2, 6, 9. Lecture Notes: Extensive Form Games: Definition; Backwards Induction; Relationship Between Extensive and Strategic Form Games; Subgame Perfect Equilibrium. Online Lecture: 5.Inflation, the Ultimatum Game, Chess, the Centipede Game; 6.Subgame Perfect Equilibrium, One-Stage-Deviation Principle, Alternating Offer Bargaining. Midterm Examination: Friday, June 19. The exam will be posted on the course website by 10am. You should your answers in a pdf file by 12:30pm. The examination will cover all the material up to but not including the subject of Subgame Perfect Equilibrium. Problem Set 3: Exercises in the Lecture Notes; Due by Tuesday June 23 at Module 5: Imperfect Information Reading: Art of Strategy, Ch. 7. Lecture Notes: mixed strategies in extensive form games; extensive form game with imperfect information, perfect/imperfect recall. Online Lecture 7: Nash and SPE in games with imperfect information, burning money. Module 6: Repeated Games Reading: Art of Strategy, Ch. 9. Lecture Notes: Finitely repeated games. Online Lecture 8: Infinitely repeated games. Problem Set 4: Exercises in the Lecture Notes; Due by Tuesday June 30 at Module 7: Bayesian Games Reading: Art of Strategy, Ch. 10 4
5 Lecture Notes: Bayesian games Online Lecture: Module 8: Auctions & Markets Reading: Art of Strategy, Ch. 10, 11. Lecture Notes: Auctions Online Lecture 9: private values auctions Module 9: Reputation and Irrationality Reading: Art of Strategy, Ch. 12, 13. Lecture Notes: Bad reputation Online Lecture 10: bad reputation Final Examination: Friday, July 3. The exam will be posted on the course website by 10am. You should your answers in a pdf file by 12:30pm. The examination will cover the entire material studied in the course with an emphasis on the last two weeks. 5
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